When booted into Snow Leopard, it pretends to allow the resize, but then informs me that I need a newer version of OSX to resize it (I assume this was triggered by installing Lion with FileVault).

What is the proper way to shrink the first partition without loosing data? I worry about using Parted or another third party app since I have encrypted partitions. (I'm not that familiar with macs)

*edit*
Here is the partition layout. I'm guessing it's showing two disks for some reason because of the encryption on disk0s3, so I'm guessing I need to run "diskutil resizeVolume disk0s2 280G Apple_HFS SnowLeopard 280G"? Is Apple_HFS the right format?

I understand, but I just don't think it will allow you to monkey with partitions with that encrypted logical volume there because of the way partitions are managed with an encrypted volume present.

OK. I'm in a big debate as to wether I should backup and try the command line or not. I had thought the EFI partition stored any of the required pre-boot materials for the encrypted volume, but don't want to take the chance.